Legacy burden becoming unsustainable for newspaper industry

By John Newby

Deseret News CEO Clark Gilbert pulled no punches when he opened the recent Key Executives Conference in St. Petersburg, Florida, by saying “unless you are willing to completely transform yourselves, I don't have a lot to say to you today.” Among other key takeaways by the former Harvard professor, author, and industry advisor on how newspapers can transition in the Digital Age:

“We have a three-year window to make the changes.”

“The industry is forever broken, it will bounce now and again, but three years from now will be the permanent reality.”

And, with regard to content: “To defend their turfs successfully, newspapers must examine every aspect of the operation and pinpoint costs of doing business — you better get your cost structures reinvented.”

I have been advocating for years the dire need to reinvent our business model. The current legacy model is simply unsustainable in today’s business climate. It isn’t a matter of what is best or what is traditional; it is simply what is affordable.

I am a strong proponent of the belief that our customers speak to us with their pocketbooks. Print circulation revenue declines should be sending us a message loud and clear: our system of providing content in its current form is losing ground to emerging systems that provide the content people value for far less cost and massively lower legacy burden.

Couple this with the competing trend that shows newspapers have traditionally assumed the role of community watchdogs, advocates for the needy and protectors of the rights and liberties of those in our communities, and two major demographic paths that have gone separate routes suddenly converge.

In the past, the newspaper's path was admirable grounds upon which to reside. But we have seen and are experiencing a major shift in what our communities need, want and desire. With their pocketbooks, they have shown that the less expensive methods of communication are what they desire. And we are failing to hear that voice.

Our competition has taken many of the components of our business model that are easy and inexpensive to duplicate — online ventures, classifieds, citizen contributions and others — leaving us with the legacy newspaper operations that are expensive to operate and produce. Hardly a recipe for success!

While certainly Gilbert and the Deseret News have a vast array of resources from which to draw from in their transformation, the message is nonetheless the same for each of us in our own businesses. We must reinvent our business model. And we have little time to do so.

Most newspaper companies, both public and private, are one good downturn or simply the loss of legal advertising away from red ink flowing on the bottom-line. Finding ways to provide relevant content (both editorial and advertising) for far less is critical. Anything less than a model that finds a way to operate effectively for 30%-40% less than it currently operates is in grave danger of failure in the near future, which is approaching much faster than many of us may realize.

Not one to throw a grenade in the room and leave, I will offer ways in which I believe we can trim our burdensome legacy cost substantially in my next blog post.